(i) The Write Easy Company manufactures a variety of pens selling for $298 each Sales have averaged

(i) The Write Easy Company manufactures a variety of pens selling for $298 each Sales have averaged 10,000 units per month during the last year Recently Write Easyâ€s closest competitor, Joy Write Company cut its prices on similar pens from $349 to $259 As a result Write Easyâ€s sales declined to 8,000 units per month 

(a) Calculate the arc cross price elasticity of demand between Write Easyâ€s and Joy Writeâ€s pens  (b) If Write Easy knows its own arc price elasticity of demand for its pens to be -22, what price would they have to charge in order to restore their monthly sales back to 10,000 units? (Assume that Joy Write maintains its price at $259)

 

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